ESI Retroactive Accounting Shweta Gupta/ Kirubakaran T February 13, 2013

Globalization Services

Agenda



Introduction



Configurations



Computation Flow Loss of Pay Scenario Mid-month Joinee and Termination



ESI Retrospective Behaviour Change in Salary of the Employee Creation/Change in Other Statutory Deductions Deletion of Other Statutory Deductions



Reporting

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Introduction Employee State Insurance (ESI) is a component of compensation provided to an employee earning wages below Rs.15,000 to provide for:

• Hospital facilities and out-patient facilities • Medicines provided by the hospital • Compensation in case of accident / death

A percentage of amount specified by a Central Act is deducted from the employees salary and sent to the ESI Corporation along with Employer's contribution. Current contribution rate for :

• Employee is 1.75% of Basic + Dearness Allowance + All other allowances + Overtime • Employer is 4.75% of Basic + Dearness Allowance + All other allowances + Overtime * Basis = Basic + Dearness Allowance + All other allowances

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Introduction

1.75%

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ESI Contribution Period

Contribution Period

Benefit Period

April 1 - September 30

January 1 - June 30

October 1 - March 31

July 1 - December 31

• If employee is eligible for ESI in any one month of ESI contribution period, then the employee continues to contribute for all subsequent months in that contribution period • ESI Number is required to be maintained (allotted by ESI) employees

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for all the

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Configurations

ESILT

• ESI contribution applicable when basis less than or equal to limit maintained in ESILT in view V_T511P

• Only Employer contribution when basis is less than or equal to ESIMN ESIMN in V_T511P

• ESI limit for Physically Challenged employees is maintained in ESIPH ESIPH in view V_T511P

IT0588

• Maintain Subtype 0001 of IT0588 (Other Statutory Deductions)

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Actual Basis Vs. Nominal Basis

Actual Basis

Nominal Basis

Basis

Basis

Eg: INR 20,000

Eg: INR 20,000

Actual Basis

Nominal Basis

Eg:INR 18,000

Eg: INR 20,000

Loss of Pay

Loss of Pay

Eg: 3 LOP

Eg: 3 LOP

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Computation flow with Loss of Pay

Actual Basis: INR 6,000 Nominal Basis: INR 12,000

Nominal basis is compared with ESI limit(INR:15,000)

Employee will contribute towards ESI

Employee has certain days of Loss of Pay Say, 15 days of LOP

Employee is eligible for ESI contribution ESI Basis: INR 12,000 © 2013 SAP AG. All rights reserved.

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Computation flow for mid - month Joinee/Termination Nominal Pay: INR 20,000

Maintained from 15th April

IT588(0001) maintained Salary exceeds the ESI limit (ESILT) Employee joined in mid of month

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Joined on 15th of April

Say, INR 20,000 is the Monthly salary

Nominal Pay is compared with ESI limit

No ESI Contribution for the employee

However, Wagetypes will have below values: /112 (Actual Basis) = INR 10,000

/113 (Nominal Basis) = INR 10,000

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Retrospective ESI Change in Salary of the Employee Creation/ Change in Other Statutory Deductions Deletion of Other Statutory Deductions

Retrospective change in salary of the employee

Salary is changed retrospectively

Difference b/w Actual ESI Basis (/3EA) from retrospective runs and previous payroll runs is taken into C/F wagetype (/AEA)

Amount from /AEA is cumulated into B/F wagetype (/ZEA) & brought into current period processing

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Retrospective increase in salary of the employee Employee is contributing towards ESI for April to September block

• Basis = /3EA

Salary is increased retrospectively from April

• Salary increment can be done from period within the same block / across blocks

Delta of Basis is brought forward to the Current period processing

• Delta Basis = /ZEA

ESI contribution would be done on current month basis + B/F delta basis © 2013 SAP AG. All rights reserved.

Basis = /3EA (New) + /ZEA

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Retrospective decrease in salary of the employee Employee is contributing towards ESI for April to September block

• Basis = /3EA

Salary is decreased retrospectively from April

• Salary decrement can be done from period within the same block / across blocks

Delta of Basis is not brought forward to the Current period processing

• Delta Basis = /ZEA

ESI contribution would be done only on current month basis

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Basis = /3EA (New)

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Retrospective creation/change in Other Statutory Deductions

Retrospective creation / change of IT0588 (0001)

Change is done in any period within the same block

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Change is done across blocks

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Creation/Change within same Block /AEA is formed in April & May, cumulated to /ZEA in June

Maintained in June eff. April

IT588(0001) maintained retrospectively Payroll is executed for some periods Employee has salary less than ESI limit

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Say, April & May period payroll is run

Basis of retro period is b/f to current period processing

ESI contribution would be done on current month + B/F basis

ESI basis = /3EA (Current month basis) + /ZEA

IT0588 is not maintained 15

Creation/Change across blocks /AEA is formed for all retro periods i.e. for April to October and cumulated to /ZEA in November Maintained in November eff. April

IT588(0001) maintained retrospectively Payroll is executed for some periods Employee has salary less than ESI limit

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Say, Till October period payroll is run

Basis of retro period is b/f to current period processing

ESI contribution would be done on current month + B/F basis

ESI basis = /3EA (Current month basis) + /ZEA

IT0588 is not maintained 16

Retrospective Deletion of Other Statutory Deductions

Retrospective deletion of IT0588 (0001)

Infotype deleted in any period within the same block

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Deletion done across blocks

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Deletion within same Block

IT588(0001) is maintained

• Employee is eligible for ESI contribution

Employee is contributing towards ESI for April and May

• Basis = /3EA

IT0588(0001) is deleted retrospectively

• Deletion is done in June (period within the same block) eff. April

System refunds ESI contribution

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Contribution done for April & May is refunded

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Deletion across the Block

IT588(0001) is maintained

• Employee is eligible for ESI contribution

Employee is contributing towards ESI

• Contribution is done in April – September block & also for October & November period

IT0588(0001) is deleted retrospectively

• Deletion is done in December (period across block) eff. April

System refunds ESI contribution

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Contribution done for October and November is refunded

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BAdI to stop Refund

HR_IN_ESI_REFUND

Refund

Not Implemented © 2013 SAP AG. All rights reserved.

Implemented

No Refund

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Reporting DEFINITION 

Generates Form 5, Form 6 & ESI Monthly Report



Contribution Period & Output Format on selection screen determines the output of the report

HINCESI0 FEATURES

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

Form 5: ESI contr. details of employees for a contr. period printed as Form

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Form 6: ESI contr. Details for a contr. Period are can be downloaded as worksheet

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ESI Monthly Report : Announced in the year 2011 to file employee's monthly details

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Queries

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Thank you Contact information: Shweta Gupta & Kirubakaran T Globalization Services SAP Labs India, Bangalore